It is hard to beat the good old FICO Score. If you want to know the basics, all you need to do is go here and simulate your score. Or, you could look at the product sheet. You could even go to one of your creditors and likely see the FICO Score for free. In any case, you will find the attributes are credit-centric: How you pay, How much you owe, and how much credit you utilize.
That’s all fine and well, but what do you do in a market of 1.35 billion people, when credit is still a novelty? This article in ScienceNordic talks about the development of credit systems in China, and how the focus is more on social attributes than hardline credit data. Even the title is a bit scary: Is China’s social credit system really the dystopian sci-fi scenario that many fear?
- British journalist James O’Malley was on the Beijing-Shanghai bullet train last month when he heard a disturbing announcement.
- “Dear passengers, people who travel without a ticket, or behave disorderly, or smoke in public areas, will be punished according to regulations and the behavior will be recorded in individual credit information system. To avoid a negative record of personal credit please follow the relevant regulations and help with the orders on the train and at the station.”
- Indeed, what disturbed James is China’s widely discussed and severely criticized Big Brother-style social credit system. But before we get carried away to 1984, let’s get a more comprehensive overview of the system, including some misunderstood or lesser-discussed aspects.
Can you fast forward the development of a scoring system in an authoritarian government? Or should you focus on credit with “Just the Facts”, as they say in Dragnet?
- It was first referred to in 2014 in a government document (in Chinese) issued by the State Council—the highest executive organ of state power in the People’s Republic of China. The document described an omnipotent social credit system due to be launched in 2020, which aims to rate everyone’s “trustworthiness.”
- The ‘credit’ referred to in the unnerving train announcement is the translation of the Chinese word ‘xinyong,’ which indicates a person’s honesty and trustworthiness.
The scoring process is still in development but there looks like subjectivity, rather than facts might drive the process.
- All 1.35 billion Chinese citizens will be subjected to the system. People with high scores will enjoy better social privileges and economic benefits. Low scores on the other hand, could get you blacklisted from accessing certain services, such as flights or train travel – just as James heard on the train.
- The potential for misuse and the likelihood of mishandling personal, private data is easily drawing public attention in today’s data-sensitive era.
Too much data? Or, off on the wrong tangent?
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group